Life QUIZ

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An insurer must keep all sales materials for at least how long?

5 years

All of the following statements are correct regarding Credit Life Insurace EXCEPT:

A. Benefits are paid to the borrowers beneficiary

B. The amount of Insurance permissible is limited per borrower

C. Premiums are usually paid by the borrower

D. Benefits are paid to the creditor

ANSWER: A. Benefits are paid to the borrower’s beneficiary

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
A. Rebating

B. Twisting

C. Switching

D. False Advertising

Answer: B. Twisting

Credit Life Insurance:

A. Is purchased on an installment basis

B. Insures the life of a creditor

C. Has a maximum term for insurance for 20 years

D. Insures the life of a debtor

Answer: D. Insures the life of a debtor

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured’s best interest are guilty of:

A. Twisting
B. Defamation
C. Misrepresentation
D. Rebating

Answer: Twisting (persuading = twisting)

Which of the following types of insurance policies is most commonly used in credit life insurance?
A. Whole Life
B. Equity Indexed Life
C. Decreasing Term
D. Increasing Term

Answer: Decreasing Term

A small employer owns a froup health insurance policy. The employer does not pay the premium by the premium due date and fails again to pay by the end of the grace period. The insurer cancels the policy. Which of the following is true?

The insurer will pay all losses through the end of the grace period

If an insurer requires an application in order to renew a life insurance policy, it is the insurer’s responsibility to send one to the insured

A. 90 days in advance of renewal

B. Within 30 days of the insured’s request

C. Within 10 days of the insured’s request

D. 30 days in adnvance of renewal

B. Within 30 days of the insured’s request

During replacement of life insurance, a replaing insurer must do which of the following?

A. Guarantee a replacement for each existing policy

B. Designate a new producer for a replaced policy

C. Send a copy of the Notice Regarding Replacement to the Department of Insurance

D. Obtain a lost of all life insurance policies that will be replaced

D. Obtain a lost of all life insurance policies that will be replaced

In NJ, the minimum age at which a person can purchase a life insurance policy on his or her own life is?

A. 13

B. 15

C. 16

D. 18

B. 15

During policy replacement, the replacing insurer must notify existing insurers within what time period?

5 business days

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replaing any existing life insurance policies. If the customer replies "Yes," which of the following best describes the agent’s next step?

The agent must provide a replacement notice to the applicant

All advertisments pertaining to life insurance policies are the responsibility of the

Insurer

A life insurance policy has lapsed, and the policyowner would like to reinstate it. In order to initiate the reinstatement process, he must submit an application to his insurer. Which of the following is true?

It is the policyowner’s responsibility to request the reinstatement application; the insurer must then deliver it within 30 days

Which of the following statements about a life insurance policy would be allowed in an insurance advertisement?
A. This is a group term policy
B. This is a retirement savings plan
C. This is a term life insurance policy
D. This life insurance policy is also an investment plan

C. This is a term life insurance policy

If an insurer requires an application in order to renew a life insurance policy, it is the insurer’s responsibility to send one to the insured within..

30 days of the insured’s request

Whcih of the following qould be the beneficiary in credit life insurance?

A. Company
B. Borrower
C. Creditor
D. Insured

C. Creditor (owner and beneficiary of the policy)

Which of the following is NOT allowed in credit life insurance?
A. Creditor requiring that a debtor buys insurance from a certain creditor

B. Creditor having a collateral assignment on the policy

C. Creditor requiring that a debtor has a life insurance

D. Creditor becoming a policy beneficiary

A. Creditor requiring that a debtor buys insurance from a certain insurer

All of the following actions can be describes as twisting EXCEPT

A. Explaining to a client the advantages of permanent insurance over term and suggesting changing policies

B. Misrepresenting the terms and conditions of the existing policy to make the new one more attractive

C. Embellishing the terms of the proposed policy in order to convince the insured to switch

D. Making an incomplete comparison between the existing and proposed policies

A. Explaining to a client the advantages of permanent insurance over term and suggesting changing policies

Which of the following scenarios would NOT be covered by insurance?
A. Client E purchases an annuity to provide for her retirement needs as she reaches her mid-50s, so that she can travel and take care of her grandchildren.

B. Client M purchases life insurance on herself prior to committing suicide.

C. Client P purchases an annuity as a savings vehicle for retirement.

D. Client F buys a life insurance policy on her husband who is the sole provider for her family so that she is taken care of if he dies.

B. Client M purchases life insurance on herself prior to committing suicide.

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why?

A. The purpose of the group was to purchase life insurance.

B. Their profession poses too high of a risk for the insurer.

C. There are not enough people in the group to qualify for group life insurance.

D. The group has not been established for long enough.

A. The purpose of the group was to purchase life insurance.

A life insurance policy insures again 5 different perils. If the policyowner wants to cancel the coverage of one of those perils, can he do that?

A. Yes, at any time.

B. No, the policyowner does not have the right to modify the policy.

C. Only with the insurer’s written consent.

D. Only if the policy specifies that a separate premium for that peril coverage is separately cancelable.

D. Only if the policy specifies that a separate premium for that peril coverage is separately cancelable.

An insurance company and insured are settling a lawsuit involving a life insurance policy. The insurer believes that the application would help to establish material facts in the case. Which of the following is true?

AOnce the policy is issued, it is permissible to use the application in litigation, provided that the insured is notified.

B. If less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence.

C. State law prohibits applications from being used in litigation.

D. Applications can only be used in court cases if they are attached to or endorsed upon the issued policy.

D. Applications can only be used in court cases if they are attached to or endorsed upon the issued policy.

In New Jersey, the public is protected by a notice of discontinuance when a policy is discontinued for nonpayment of premiums. When a policy is discontinued, all of the following are required EXCEPT
A. Refund of premiums.

B. Written notice to the policyholder.

C. A reminder of the date of discontinuance.

D. Ceasing to collect premium payments from group participants unless the group policyholder remains fully responsible for the benefits.

A. Refund of premiums

All of the following are true regarding rebates EXCEPT

A. Rebates are allowed if it’s in the best interest of the client.

B. Rebates are only allowed if specifically stated in the policy.

C. Rebating can be anything of economic value, given as an inducement to buy.

D. Dividends are not considered to be rebates.

A. Rebates are allowed if it’s in the best interest of the client. (Rebates are illegal!)

Which of the following is true regarding license cancellation and reinstatement?

A. The producer must allow it to lapse. After that point, it can be reinstated any time within the next 2 years, provided that the continuing education requirements have been met.

B. The license needs to be returned to the Insurance Department. Once this occurs, it cannot be reinstated.

C. The producer must complete a brief interview with the Commissioner’s Office. The license may then be reinstated within 1 year.

D. The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee.

D. The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee.

If a person violates a cease and desist order, the Commissioner can turn the matter over to the New Jersey Superior Court for further legal action and can assess a fine for each violation of up to
A$10,000.
B$1,000.
C$3,000.
D$5,000.

D. $5,000

An insurer is closing a branch office in this state. Within how many days of the office closing must the insurer notify the Department?
A. 10 days
B. 15 days
C. 30 days
D. 90 days

C. 30 days

All of the following are considered limited lines of authority EXCEPT
A. Surplus lines.
B. Credit insurance.
C. Travel insurance.
D. Bail bonds.

A. Surplus lines

Which of the following best describes a misrepresentation?

A. Making a deceptive or untrue statement about a person engaged in the insurance business

B. Making a maliciously critical statement that is intended to injure another person

C. Discriminating among individuals of the same insuring class

D. Issuing sales material with exaggerated statements about policy benefits

D. Issuing sales material with exaggerated statements about policy benefits

Which of the following is NOT true regarding a Certificate of Authority?

A. It is issued to group insurance participants.

B. It may be necessary for transacting business in a specific state.

C. It is equivalent to an insurance license.

D. It is issued by the state department of insurance.

A. It is issued to group insurance participants.

What significance did US v South-Eastern Underwriters have on the insurance industry?

It reversed the decision of Paul v Virginia, ,determining that insurance is interstate commerce and should be regulated federally

Through which branch(es) of the government is insurance currently regulated?
A. Legislative
B. Judicial
C. Executive
D. All of the above

D. All of the above

Which of the following was created to protect policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?

A. New Jersey Insurance Solvency Association

B. New Jersey Consumer Protection Organization

C. New Jersey Life and Health Guaranty Association

D. New Jersey Insurance Consumer Protectorate

C. New Jersey Life and Health Guaranty Association

Which of the following would be considered false advertising?

A. Stating that a policy has limitations and exclusions

B. Failing to include premiums in sales materials

C. Implying that the agent is the insurer

D. Stating the differences in benefits between Whole Life Insurance and Term Life Insurance

C. Implying that the agent is the insurer

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

A. An offer to share in commissions generated by the sale.

B. Dividends from a mutual insurer.

C. An offer of employment.

D. Stocks, securities, or bonds.

B. Dividends from a mutual insurer. (Policy already specifies that they might get paid)

An insurance application cannot ask about which of the following information about an applicant?

A. Age
B. Gender
C. Address
D. Sexual orientation

D. Sexual Orientation

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
A. False advertising
B. Defamation
C. Coercion
D. Misrepresentation

A. False advertising

If the issuance of a license is denied and a hearing is requested, which entity will be making determination whether or not the license should be issued?

A. The Office of Administrative Law

B. The Department of Insurance

C. The NAIC

D. The state courts

B. The Department of Insurance

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?

A. An irrevocable beneficiary

B. A buy-sell agreement

C. Family term rider

D. Third-party ownership

D. Third-party ownership

Which of the following statements concerning buy-sell agreements is true?

A. Premiums paid are deductible as a business expense.

B. Benefits received are considered income taxable.

C. Buy-sell agreements pay in the event of a medical emergency.

D. Buy-sell agreements are normally funded with a life insurance policy.

D. Buy-sell agreements are normally funded with a life insurance policy.

What percentage of a company’s employees must take part in a noncontributory group life plan?
A0%
B25%
C75%
D100%

D. 100%

An employee is insured under her employer’s group life plan. If she terminates her group coverage, which of the following statements is INCORRECT?

A. The premium for individual coverage will be based upon the insured’s attained age.

B. The insured may choose to convert to term or permanent individual coverage.

C. The insured would not need to prove insurability for a conversion policy.

D. The insured may convert coverage to an individual policy within 31 days.

B. The insured may choose to convert to term or permanent individual coverage.

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

A. Funds accumulate on a tax-deferred basis.

B. Employee and employer contributions are not counted as income to the employee for income tax purposes.

C. At distribution, all amounts received by the employee are tax free.

D. Employer contributions are tax deductible as ordinary business expense.

C. At distribution, all amounts received by the employee are tax free.

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?
A4 credits
B6 credits
C10 credits
D40 credits

B. 6 credits

Which of the following applicants would NOT qualify for a Keogh Plan?

A. Someone who works for a self-employed individual

B. Someone who works 400 hours per year

C. Someone who has been employed for more than 12 months

D. Someone who is over 25 years of age

B. Someone who works 400 hours per year (have to work minimum 1000 hours)

An insured decides to surrender his $100,000 Whole Life policy. The premiums paid into the policy added up to $15,000. At policy surrender, the cash surrender value was $18,000. What part of the surrender value would be income taxable?
A$50,000
B$18,000
C$15,000
D$3,000

D. $3,000 (18k-15k)

A key person insurance policy can pay for which of the following?
A. Workers compensation

B. Hospital bills of the key employee

C. Costs of training a replacement

D. Loss of personal income

C. Costs of training a replacement

All of the following would be different between qualified and nonqualified retirement plans EXCEPT

ATaxation of withdrawals
BTaxation of contributions
CIRS approval requirements
DTaxation on accumulation

D. Taxation on accumulation

Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business?
AName of reference
BBusiness name
CAssumed name
DLegal name

B. Business name

Which of the following is the closest term to an authorized insurer?
ALegal
BAdmitted
CCertified
DLicensed

B. Admitted

All of the following would be considered an insurance transaction EXCEPT
A. Obtaining an insurance license.
BSoliciting a policy.
CAdvising a policyholder regarding a claim.
DNegotiating coverage.

A. Obtaining an insurance license

If an applicant’s license has lapsed within the past year, the applicant may apply for late renewal of the license within the maximum of how many months of expiration?
A3 months
B6 months
C9 months
D12 months

D. 12 months

An insurer goes bankrupt and is unable to pay on any of its insureds’ claims. Which of the following will happen?
A. The claims will be paid by a nationally-based program.

B. The claims will be paid by the state Life and Health Guaranty Association.

C. The claims will be paid by the state Department of Insurance.

D. The insureds will not be paid.

B. The claims will be paid by the state Life and Health Guaranty Association.

Who is a third-party owner?
A. An insurer who issues a policy for two people

B. An employee in a group policy

C. An irrevocable beneficiary

D. A policyowner who is not the insured

D. A policyowner who is not the insured

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

A. Those who have no history of claims

B. Those who have been insured under the plan for at least 5 years

C. Those who have worked in the company for at least 3 years

D. Those who have dependents

B. Those who have been insured under the plan for at least 5 years

All of the following are general requirements of a qualified plan EXCEPT

A. The plan must be communicated to all employees.

B. The plan must be for the exclusive benefits of the employees and their beneficiaries.

C. The plan must be permanent, written and legally binding.

D. The plan must provide an offset for social security benefits.

D. The plan must provide an offset for social security benefits

For a retirement plan to be qualified, it must be designed for the benefit of
AEmployer.
BIRS.
CEmployees.
DKey employee.

C. Employees

Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
ABe at least age 50
BHave attained fully insured status
CBe disabled for at least 1 year
DHave permanent kidney failure

B. Hae attained fully insured status

In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years?
A10
B1
C3
D5

D. 5

All of the following are true of key person insurance EXCEPT
A. The key employee is the insured.

B. The plan is funded by permanent insurance only.

C. There is no limitation on the number of key employee plans in force at any one time.

D. The employer is the owner, payor and beneficiary of the policy.

B. The plan is funded by permanent insurance only

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

ATerm insurance only
BPermanent insurance only
CUniversal life insurance only
DAny form of life insurance

D. Any for of life insurance

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT
AFully insured status.
BWaiting period of 5 months.
CBeing age 65.
DInability to perform any gainful work.

C. Being age 65

Employer contributions made to a qualified plan
AAre taxed annually as salary.
BAre subject to vesting requirements.
CMay discriminate in favor of highly paid employees.
DAre after-tax contributions.

B. Are subject to vesting requirements

Which of the following terms is used to name the nontaxed return of unused premiums?
AInterest
BSurrender
CDividend
DPremium return

C. Dividend

What is the main purpose of the Seven-pay Test?
AIt requires level premium payments for 7 years.
BIt ensures that the policy benefits are paid out in 7 years.
CIt guarantees interest minimum.
DIt determines if the insurance policy is an MEC.

D. It determines if the insurance policy is an MEC

Whats an SEP plan?

A qualified plan for a small business

Which of the following is NOT true regarding policy loans?
A. Policy loans can be repaid at death.

B. An insurer can charge interest on outstanding policy loans.

C. A policy loan may be repaid after the policy is surrendered.

D. Money borrowed from the cash value is taxable.

D. Money borrowed from the cash value is taxable

In which of the following instances would the premium be tax deductible?

A. Premiums paid by a mother on her son’s policy

B. Premiums paid by an employer on the life of a key person

C. Premiums paid by an employer on a $30,000 group term life insurance plan for employees

D. Premiums paid by an individual on his/her own life insurance

C. Premiums paid by an employer on a $30,000 group term life insurance plan for employees

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

APaid-up addition
BAccumulation at interest
CCash option
DReduction of premium

D. Reduction of premium

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
A1 year
B2 years
C5 years
D7 years

B. 2 years

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor’s parents have died or become disabled?

AWaiver of Premium
BPayor Benefit
CJumping Juvenile
DJuvenile Premium Provision

B. Payor Benefit

Are policywners required by the state to be included in the policy?

Yes

The paid-up addition option uses the dividend

A. To accumulate additional savings for retirement.

B. To purchase a smaller amount of the same type of insurance as the original policy.

C. To purchase a one-year term insurance in the amount of the cash value.

D. To reduce the next year’s premium.

B. To purchase a smaller amount of the same type of insurance as the original policy.

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

AInterest only option
BLife income with period certain
CJoint and survivor
DFixed amount option

A. Interest only option

Which of the following information will be stated in the consideration clause of a life insurance policy?

AThe parties to the contract
BThe time period allowed for the payment of premium
CThe conditions for insurability
DThe amount of premium payment

D. The amount of premium payment

Joint and 2/3 survivor settlement option means…

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive

During partial withdrawal from a universal life policy, which portion will be taxed?
ALoan
BInterest
CCash value
DPrincipal

B. Interest

Two types of assignments

Absolute and collateral

Which of the following would be deducted from the death benefit paid to a beneficiary, if a partial accelerated death benefit had been paid while the insured was still alive?

A. Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

B. There are no deductions taken from death benefits.

C. Penalty imposed for early withdrawal of the death benefit, plus the amount of earnings lost by the insurance company in interest income

D. 10% federal death benefit income tax, plus the amount of the accelerated benefit

A. Amount paid with the accelerated benefit, plus the earnings lost by the insurance company in interest income from the accelerated benefit

The Waiver of Cost of Insurance rider is found in what type of insurance?
AJoint and Survivor
BJuvenile Life
CUniversal Life
DWhole Life

C. Universal Life

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

AOption B
BCorridor option
CVariable option
DOption A

A. Option B

A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that?

ASecond-to-Die
BFamily Income Policy
CJoint Life Policy
DSurvivorship Life Policy

C. Joint Life Policy

Which of the following products requires a securities license?

AVariable annuity
BFixed annuity
CEquity Indexed annuity
DDeferred annuity

A. Variable Annuity

All other factors being equal, the least expensive first-year premium payment is found in

AAnnually Renewable Term.
BIncreasing Term.
CDecreasing Term.
DLevel Term.

A. Annually renewable term

What are the two components of a universal policy?

AMortality cost and interest
BSeparate account and policy loans
CInsurance and cash account
DInsurance and investments

C. Insurance and cash accounts

All of the following are true regarding a decreasing term policy EXCEPT

A. The payable premium amount steadily declines throughout the duration of the contract.

B. The death benefit is $0 at the end of the policy term.

C. The contract pays only in the event of death during the term and there is no cash value.

D. The face amount steadily declines throughout the duration of the contract.

A. The payable premium amount steadily declines throughout the duration of the contract.

Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?

AVariable life
BDecreasing term
CStraight whole life
DUniversal life

D. Universal Life

The policyowner of a Universal Life policy may skip paying the premium and the policy will not lapse as long as

A. The policyowner cannot skip premiums without the policy lapsing.

B. The next month’s premium is sufficient to cover both the current premium amount and the skipped amount.

C. The policy contains sufficient cash value to cover the cost of insurance.

D. The previous premium payments were high enough to create an excess of premium.

C. The policy contains sufficient cash value to cover the cost of insurance.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

A. Until the policyowner’s age 65.

B. For 20 years.

C. Until the policyowner’s age 100, when the policy matures.

D. For 20 years or until death, whichever occurs first.

D. For 20 years or until death, whichever occurs first.

Which of the following best defines target premium in a universal life policy?

A. The corridor of insurance

B. The recommended amount to keep the policy in force throughout its lifetime

C. The maximum amount the policyowner may pay on a policy

D. The minimum amount to make sure the policy is annually renewable

B. The recommended amount to keep the policy in force throughout its lifetime

Which of the following is TRUE regarding the annuity period?

A. It may last for the lifetime of the annuitant.

B. During this period of time the annuity payments grow interest tax deferred.

C. It is also referred to as the accumulation period.

D. It is the period of time during which the annuitant makes premium payments into the annuity.

A. It may last for the lifetime of the annuitant.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

A. It will increase each year during the next 5 years as the face amount increases each year.

B. It will increase because the insured will be 5 years older than when the policy was originally purchased.

C. It will remain the same for the new 5-year term.

D. It will decrease for the new 5-year term since the insured is now a lesser risk to the company.

B. It will increase because the insured will be 5 years older than when the policy was originally purchased.

A straight Life policy has what type of premium

A level annual premium for the life of the insured

The death protection component of Universal Life Insurance is always

AIncreasing Term
BAnnually Renewable Term
CWhole Life
DAdjustable Life

B. Annually Renewable Term

Term policies are available as Level, Increasing, and Decreasing. Which policy component fluctuates depending on the policy type?

APremium
BCash value
CNonforfeiture values
DDeath benefit

D. Deth Benefit

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

AThe length of coverage.
BThe premium.
CThe amount of insurance.
DThe type of investment.

D. The type of investment

When would a 20-pay whole life policy endow?

When the insured reaches age 100

What does "level" refer to in level term insurance?

Face amount

All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

AAs high
BHalf the amount
CLower
DHigher

C. Lower

A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?

ALevel term
BTerm to specified age
COrdinary life policy
DLimited pay whole life

Level term

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

AUniversal life
BFlexible life
CVariable life
DAdjustable life

Universal Life

Which of the following determines the cash value of a variable life policy?

AThe company’s general account
BThe policy’s guarantees.
CThe premium mode
DThe performance of the policy portfolio

D. The performance of the policy portfolio

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?

AIllustrations
BBuyer’s Guide
CInsurance Index
DPolicy Summary

Buyer’s Guide

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant’s

APrior insurance.
BAncestry.
CCredit history.
DHabits.

B. Ancestry

Which of the following would NOT be considered an exception to the National Do Not Call List?

A. Calls based from outside of the United States

B. Calls for which the consumer has given prior written permission

C. Calls which are not commercial or do not include unsolicited advertisements

D. Calls by or on behalf of tax-exempt nonprofit organizations

A. Calls based from outside of the United States

When is the earliest a policy may go into effect?

A. After the underwriter reviews the policy

B. When the application is signed and a check is given to the agent

C. When the first premium is paid and the policy has been delivered

D. When the insurer approves the application

B. When the application is signed and a check is given to the agent

What is the purpose of a conditional receipt?

A. It is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue.

B. It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

C. It guarantees the applicant that a policy will be issued in the amount applied for in the application.

D. It serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company.

B. It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating?

a) Making deceptive statements about a competitor
b) Telling a client that his first premium will be waived if he purchased the insurance policy today
c) Inducing the insured to drop a policy in favor of another one when it’s not in the insured’s best interest
d) Charging a client a higher premium for the same policy as another client in the same insuring class

b) Telling a client that his first premium will be waived if he purchased the insurance policy today

A Universal Life insurance policy has two types of interest rates that are called

a) Fixed and Variable.
b) Minimum and Target.
c) Guaranteed and Current.
d) Option A and Option B.

c) Guaranteed and Current.

What is the other term for the cash payment settlement option?

a) Principal amount
b) Face amount
c) Proceeds
d) Lump sum

d) Lump sum

Which is TRUE about the cash surrender nonforfeiture option?

a) Funds exceeding the premium paid are taxable as ordinary income.
b) After the cash surrender, the insured is covered for a grace period of 1 month.
c) The policy remains active for some time after the policyholder opts for cash surrender.
d) The policyholder receives the original cash value of the policy.

a) Funds exceeding the premium paid are taxable as ordinary income.

A producer received a group master policy and certificates for delivery to the insured. Within how many days must the policy and certificates be delivered?

a) 5 calendar days
b) 10 business days
c) 10 calendar days
d) 5 business days

c) 10 calendar days

If an insured receives accelerated death benefits, what is the least amount of the original death benefit that the beneficiary would receive after the insured’s death?

a) 0%
b) 50%
c) 25%
d) 10%

a) 0%

Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?

a) Term rider
b) Guaranteed insurability rider
c) Payor benefit rider
d) Substitute insured rider

d) Substitute insured rider

The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive?

a) $0
b) $50,000 (50% of the policy value)
c) $100,000
d) $300,000 (triple the amount of policy value)

c) $100,000

Which of the following is NOT required information a producer must provide before soliciting insurance?

a) Producer’s name
b) Producer contact information
c) The nature of producer’s relationship with the insurer being represented
d) The name of the insurer the producer represents

b) Producer contact information

Who might receive dividends from a mutual insurer?

a) Policyholders
b) Subscribers
c) Stockholders
d) Agents

a) Policyholders

Which of the following is a duty of the Commissioner of insurance in this state?

a) Appoint individual producers
b) Amend rules and regulations
c) Imprison Insurance Code violators
d) Establish insurance rates

b) Amend rules and regulations

If an agent wishes to sell variable life policies, what license must the agent obtain?

a) Surplus Lines
b) Personal Lines
c) Securities
d) Adjuster

c) Securities

Which is true about a spouse term rider?

a) The rider is decreasing term insurance.
b) Coverage is allowed up to age 75.
c) The rider is usually level term insurance.
d) Coverage is allowed for an unlimited time.

c) The rider is usually level term insurance.

What is the benefit of choosing extended term as a nonforfeiture option?

a) It matures at age 100.
b) It allows for coverage to continue beyond maturity date.
c) It can be converted to a fixed annuity.
d) It has the highest amount of insurance protection.

d) It has the highest amount of insurance protection.

Life income joint and survivor settlement option guarantees

a) Income for 2 or more recipients until they die.
b) Payment of interest on death proceeds.
c) Payout of the entire death benefit.
d) Equal payments to all recipients.

a) Income for 2 or more recipients until they die.

Which of the following terms is used to name the nontaxed return of unused premiums?

a) Interest
b) Surrender
c) Dividend
d) Premium return

c) Dividend

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount

a) The same as the original policy minus the cash value.
b) Equal to the original policy for as long a period of time that the cash values will purchase.
c) In lesser amounts for the remaining policy term of age 100.
d) Equal to the cash value surrendered from the policy.

b) Equal to the original policy for as long a period of time that the cash values will purchase.

Which nonforfeiture option provides coverage for the longest period of time?

a) Extended term
b) Paid-up option
c) Accumulated at interest
d) Reduced paid-up

d) Reduced paid-up

All of the following are true of key person insurance EXCEPT

a) The key employee is the insured.
b) The plan is funded by permanent insurance only.
c) There is no limitation on the number of key employee plans in force at any one time.
d) The employer is the owner, payor and beneficiary of the policy.
Key Person coverage may be funded by any type of life insurance.

b) The plan is funded by permanent insurance only.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

a) The death benefit can be increased only by exchanging the existing policy for a new one.
b) The death benefit can be increased by providing evidence of insurability.
c) The death benefit cannot be increased.
d) The death benefit can be increased only when the policy has developed a cash value.

b) The death benefit can be increased by providing evidence of insurability.

What type of insurance would be used for a Return of Premium rider?

a) Level Term
b) Decreasing Term
c) Annually Renewable Term
d) Increasing Term

d) Increasing Term

Which of the following statements about a life insurance policy would be allowed in an insurance advertisement?

a) This life insurance policy is also an investment plan.
b) This is a group term policy.
c) This is a retirement savings plan.
d) This is a term life insurance policy.

d) This is a term life insurance policy.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

a) An offer of employment.
b) Stocks, securities, or bonds.
c) An offer to share in commissions generated by the sale.
d) Dividends from a mutual insurer.

d) Dividends from a mutual insurer.

Proceeds from life insurance policies are protected from the beneficiary’s debts under all of the following circumstances EXCEPT

a) The amount of debt exceeds the policy’s face value.
b) The amount of debt exceeds 50% of the policy’s face value.
c) There are no circumstances under which proceeds are protected from the beneficiary’s debts.
d) Some of the premiums were paid in an attempt to defraud creditors.

d) Some of the premiums were paid in an attempt to defraud creditors.

The accelerated benefits provision will provide for an early payment of the death benefit when the insured

a) Has earned enough credits.
b) Becomes disabled.
c) Becomes terminally ill.
d) Needs to borrow money.

c) Becomes terminally ill.

Which of the following products requires a securities license?

a) Equity Indexed annuity
b) Deferred annuity
c) Variable annuity
d) Fixed annuity

c) Variable annuity

Waiting period on a Waiver Premium rider in life insurance policies

6 months

Which is NOT true about beneficiary designations?

A. Trusts can be valid beneficiaries.

B. The beneficiary must have insurable interest in the insured.

C. The beneficiary may be a natural person.

D. The policy does not have to have a beneficiary named in order to be valid.

B. The beneficiary must have insurable interest in the insured.

Which of the following is NOT true regarding policy loans?

A)Policy loans can be repaid at death.

B)An insurer can charge interest on outstanding policy loans.

C)A policy loan may be repaid after the policy is surrendered.

D)Money borrowed from the cash value is taxable.

D)Money borrowed from the cash value is taxable.

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

A. Premiums are tax deductible by the key employee.

B. Premiums are tax deductible as a business expense.

C. Premiums are taxable to the employee.

D. Premiums are not tax deductible as a business expense.

D. Premiums are not tax deductible as a business expense.

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